PM rules out emergency car tariffs

Prime Minister Julia Gillard has ruled out emergency tariffs to help the car manufacturing industry, saying it may spark trade reprisals.

PM rules out emergency car tariffs

24 May 2013Judith Ireland, Ben Schneiders, Jonathan Swan

Prime Minister Julia Gillard has ruled out emergency tariffs to help the car manufacturing industry, saying it may spark trade reprisals.

In the wake of suggestions from some Labor MPs and unionists that Australia may need to consider such an emergency measure, Ms Gillard said she did not think tariffs would assist manufacturers in the long-term.

''I would rule that out,'' she told reporters on the Central Coast on Friday.

Speaking a day after Ford announced it would end car production in Australia in 2016, Ms Gillard said imposing tariffs may spark trade reprisals and was not the right strategy for Australia.

The ACTU has also rejected calls for tariffs to be lifted, with secretary Dave Oliver telling ABC Radio on Friday morning that this was not the answer.

He said the economic reforms of the 1980s and onwards, which both lowered tariffs and boosted industry assistance, had ''by and large, that has been a success story''.

''I'm not calling for tariffs to be put on,'' Mr Oliver, a former head of the Australian Manufacturing Workers Union, said.

The rejections come after another union head and three Labor MPs called for discussion of the tariff issue.

Current AMWU national secretary Paul Bastian on Thursday told Fairfax Media that tariffs should be an option.

''We've always maintained there's no such thing as free trade and you never get a better example of that than in the auto sector,'' he said. ''We play by a set of rules that no other country plays by.''

Mr Bastian said devaluing the currency, as Japan had done, should also be considered. He said Japan's move to devalue the Yen had made its car industry much more competitive.

The call from Mr Bastian has also been supported by some politicians including South Australian independent senator Nick Xenophon, who backed the use of a temporary import tariff on foreign-made cars, and several Labor MPs.

Imported cars currently attract a 5 per cent tariff.

South Australian Labor MP Nick Champion said the government should ''at least discuss if not implement safeguard tariffs'' to protect local manufacturers against the artificially inflated dollar and competitors such as Japan who were deliberately devaluing their currencies.

''As long as the dollar is above a certain level, around 91 or 92 cents . . . we should be implementing a safeguard tariff,'' Mr Champion said.

Labor MP for the seat of Corangamite, Darren Cheeseman, whose seat takes in parts of Geelong, said there was a need for an ''emergency'' response.

''To establish an emergency tariff once the dollar returns to say 90 US cents, that is the time in which we might reconsider these matters.''

Leader of Labor's Left faction, Doug Cameron, said ''nothing should be off the table'' when it came to protecting Australia's manufacturing industry.

''We should in my view be looking at these safeguard measures and implementing a short term tariff if it's required in the national interest,'' Senator Cameron said.

Senator Cameron said a number of backbenchers shared his view but he did not think there was much support for tariffs from the ''economic rationalists'' within Labor's senior ranks.

''I think their argument for free trade and that we have got to be purer than anyone else is certainly wearing a bit thin,'' he said.

Shadow treasurer Joe Hockey was quick to jump on the comments, tweeting: ''Labor MPs call for new tax on motor vehicles ( tariffs) which would significantly increase the cost of 85% of all new cars in Aus . . . madness!''

However, Trade Minister Craig Emerson has also rejected that push but backed an ACTU call for a dialogue between industry, governments and unions.

On Friday afternoon, Ms Gillard said she supported the ACTU’s request for a "strategic discussion on the future of Australia's automotive industry".

Ms Gillard told the National Panel for Economic Reform - which involves government, business, union and community leaders - that the meeting would be built around the existing Taskforce on Manufacturing.

"Minister Emerson, as acting Industry Minister will speak with key stakeholders shortly to formalise an agenda for the meeting and commission the necessary work from officials," she said.

Ford Australia chief executive Bob Graziano announced on Thursday almost 1200 blue-collar workers would lose their jobs when the car maker shuts its Broadmeadows and Geelong production lines in 2016 – a move that would end nearly 100 years of manufacturing in Australia.

Once Ford leaves in 2016, it would leave Toyota and General Motors Holden as the only two local car manufacturers.

The federal government has committed $30 million in federal funds to help workers and local communities affected by the closures and called on Ford to pitch in.

Ms Gillard renewed that call on Friday: ''I think Ford has an obligation to these communities to contribute and to contribute generously.''

Ford spokeswoman Sinead Phipps said the carmaker was ''very willing'' to contribute to the government's assistance fund, but she said it was ''too early to say'' how much Ford would give.

''We need to work with the federal and state governments to see how we best do that,'' Ms Phipps said.

Ahead of Ford's announcement industry leaders warned the closure of one big car maker would likely result in the industry shutting down.

In frank comments last month former global Ford chief executive Jac Nasser, now BHP Billiton chairman, said the end of car manufacturing appeared ''inevitable''.

Former Nissan Australia head Ivan Deveson, who was also with General Motors for 32 years, said on Thursday that Ford's closure put the other car makers at risk. ''It may not be the final blow but it certainly jeopardises the efficiency of the local suppliers and their ability to maintain costs for the remaining two,'' he said.

Former innovation minister and advocate of the Australian car industry, Kim Carr, on Friday described Ford's decision as a ''profound disappointment'' and a ''tragic set of circumstances''.

Senator Carr, speaking to Fairfax Media from Germany, said he was confident Toyota and Holden would continue making cars in Australia but ''without co-investment from the Australian government the industry won't survive''.